North and South Korea have agrees to start regular rail freight services across their heavily fortified border next month for the first time in more than half a century.

North and South Korea have agreed to start regular rail freight services across their heavily fortified border next month for the first time in more than half a century, it was announced on Friday.

The services will begin on December 11, a joint statement said on the final day of a rare meeting of prime ministers from the two sides.

In other reconciliation moves, the two nations agreed to start creating a joint fishing zone in the Yellow Sea in the first half of next year. The aim is to prevent further clashes around the disputed sea border, the scene of bloody naval battles in 1999 and 2002.

Cross-border trains made test runs in May in what was hailed as a milestone for unification between two countries still technically at war after their 1950-53 conflict ended only in an armistice.

But the North's military had been reluctant to give security guarantees for a regular operation on the 20-kilometre (12 mile) section of track, which would service the Seoul-funded industrial estate at Kaesong just north of the border.

President Roh Moo-Hyun and North Korean leader Kim Jong-Il agreed at their historic summit in Pyongyang early last month to resume regular rail services.

This week's prime ministerial meeting, the first for 15 years, was tasked with implementing the sweeping summit declaration on promoting peace and co-prosperity.

"This accord will provide a major opportunity for South and North Korea to speed up exchanges and cooperation, and to advance peace and prosperity on the Korean peninsula," an upbeat Lee Jae-Joung, Seoul's unification minister, told reporters.

The issue of military security guarantees would be handled when defence ministers from the two sides meet late this month, he said.

Regular cross-border freight services would signal a marked opening-up by the hardline communist North, which is eager for help to revive its crumbling economy.

The border remains one of the most heavily mined areas on earth, and extensive demining had to be undertaken before the railway test runs.

In another sign of opening up, the North has agreed to let South Korean businessmen use the Internet and cellphones when visiting Kaesong, Lee said.

Prime ministerial meetings will be held every six month in future.

Last month's summit agreed on a variety of joint reconciliation projects costing billions of dollars, including the establishment of the joint fishing area as part of a "peace zone" in the Yellow Sea.

A special economic zone around the North's southwestern port and naval base of Haeju would be part of the peace zone. The two leaders also agreed to expand Kaesong, jointly develop shipyards in the North, upgrade the North's decrepit roads and railways and expand tourist and cultural exchanges.

On the joint fishing area, a committee grouping both sides will meet this year to discuss the project, said Friday's joint statement. The two sides will conduct a joint feasibility study on developing Haeju by year-end.

North and South agreed to begin repairing the highway between Pyongyang and Kaesong next year, along with work on a railway connecting Kaesong to Sinuiju on the Chinese border.

South Korea's government sees joint developments such as Kaesong as a way to narrow the huge wealth gap in preparation for possible eventual reunification.

Some 20,000 North Koreans earning about 60 dollars a month produce clothes, utensils, watches and other goods for South Korean firms.

A Hyundai Research Institute study has estimated the cost to South Korea of all the summit projects at 11 billion dollars. The Seoul government, which has less than four months still in office, says private businesses will pick up most of the investment tab.